Question

Jen purchased a condo in naples fl for $699,000. she put 20% down and financed the rest at 5% for 35 years. what are jen's total finance charges

Answer 1

The formula:

$699,000 * .80 = $559,200

Number of payments = 35 years x 12 months = 420 months

Interest rate as a decimal = 5% ÷ 100 = .005

Interest due on each payment = .05 ÷ 12 = 0.00416666666666666666666666666667

Payment = (0.00416666666666666666666666666667 * 559,200) / 1 – (1 + 0.00416666666666666666666666666667)^ - 420

= $2330.0000000000000000000000000019 / 0.82559311017996182684375136875003

= $2822.213474494850504974364179856

$2822.213474494850504974364179856 x 420 months - $559,200 =

$1,185,329.6592878372120892329555395 – $559,200 = $626,129.65928783721208923295553952

Therefore, Jen's total finance charges is $626,129.66

Answer 2

Answer:

$626,128.20

Step-by-step explanation:

Jen purchased a condo for $699,000. She put 20% down and financed the rest at 5% for 35 years.

The amount she made by down payment is,

$=699,000\times \dfrac{20}{100}$

$=\ 139,800$

The amount left for monthly payment is,

$=699,000-139,800=\ 559,200$

We know that,

$\text{PV of annuity}=P\left[\dfrac{1-(1+r)^{-n}}{r}\right]$

Here,

PV = Present Value = $559,200,

P = Monthly payment,

r = Monthly rate of interest = $\dfrac{0.05}{12}$

n = number of months = 35 years = 420 months

Putting the values,

$\Rightarrow 559200=P\left[\dfrac{1-(1+\frac{0.05}{12})^{-420}}{\frac{0.05}{12}}\right]$

$\Rightarrow P=\dfrac{559200}{\left[\dfrac{1-(1+\frac{0.05}{12})^{-420}}{\frac{0.05}{12}}\right]}$

$\Rightarrow P=\ 2,822.21$

So total payment will be,

$=139,800+(420\times 2,822.21)$

$=\ 1,325,128.2$

Therefore, the finance charge will be,

$=1,325,128.2-699,000=\ 626,128.20$